Monday Morning Cheat Sheet: 3 Stories Moving Markets



It’s Monday, November 11, and with stock futures edging higher in pre-market trading, the Dow could set a fresh record in market sentiment stays optimistic. Here are three stories to keep an eye on.

1. U.S. Markets

Equities have rallied over the past few weeks, closing up for five consecutive weeks ended this past Friday. After a barage of economic data last week, traders and investors will turn back to corporate earnings — specifically from major retailers — due out this week to gauge the strength of the economy. Strong third-quarter results for retailers indicate that consumer sentiment emerged from the October partial shutdown and debt-ceiling standoff relatively unharmed, despite sharp declines in overall economic confidence.

At 8:40 a.m., Dow futures were up 0.03 percent, S&P 500 futures were up 0.04 percent, and Nasdaq futures were down 0.04 percent. Wal-Mart (NYSE:WMT) and Macy’s (NYSE:M) will both post earnings this week.

2. Irish Economy

Ireland could become the first European country to successfully exit a bailout. International lenders — the European Commission, the European Central Bank, and the International Monetary Fund — made a final payment to Ireland of an 85 billion euro ($113.68 billion) bailout package that emerged out of the financial crisis. Like in the United States, Ireland suffered a collapse of home prices, which led to the creation of a lot of bad debt. Instead of letting the banks fail, though, and risk systemic damage to the financial sector, Ireland asked for international support.

But recent data suggests that the Irish economy is in a fairly steady and robust recovery. According to the October Investec Services PMI report for Ireland, the Irish service sector showed its strongest increase in new business since before the financial crisis. More importantly, new business volume was coupled with increased employment. “The latest Investec Services PMI Ireland report shows that the rate of growth in the Irish services sector quickened during October. The headline PMI picked up to 60.1, from September’s 56.8,” commented Philip O’Sullivan, chief economist at Investec Ireland. “The sector has now recorded growth for 15 successive months, while the more forward-looking components of the Services PMI suggest no pause in this sequence of expansion is likely to materialise for quite some time.”

Major European equity markets posted gains in mid-day trading. In the UK, the FTSE 100 was up 0.31 percent; in Germany, the DAX was up 0.25 percent; in France, the CAC 40 was up 0.54 percent; and the Euronext 100 index was up 0.50 percent.

3. Chinese Economy

About 370 leaders of China’s ruling communist party — ranging from political officials and heads of state-run companies – will conclude a four-day meeting on Monday. The purpose of the meeting was to determine the nature of economic reform over the next decade, and officials are expected to release a statement afterwards describing the road ahead. Over the mid-term — as hinted at by the People’s Bank of China — the country’s monetary strategy may begin to tighten as officials seek to curb credit growth amid speculation that the nation will face a series of adverse credit events in the coming years. As of October, Chinese businesses were the most leveraged in the world.

But reigning in credit too quickly could have a negative impact on economic growth, and China needs to maintain gross domestic product growth of about 7.2 percent per year in order to keep unemployment in check. China’s GDP grew 7.8 percent in the third quarter and 7.7 percent over the first nine months. Recent data suggest that China’s economy is running — not walking — into the fourth quarter, which could allow policymakers the slack they need to implement more mid- and long-term reforms. Industrial production increased by 10.3 percent on the year in October, beating economist expectations for 10 percent growth.

Meanwhile, retail sales increased 13.3 percent on the year, nearly consistent with economist expectations for a 13.35 percent increase. Inflation also accelerated in October, climbing 3.2 percent on the year, up from 3.1 percent in September. Major Asian equity markets closed the day on a mixed note. In Japan, the Nikkei climbed 1.30 percent to 14,269.84, and the yen climbed to 99.1550 against the dollar. In Hong Kong, the Hang Seng c;o,bed 1.43 percent to 23,069.85 and in Shanghai the SE Composite edged up 0.16 percent to 2,109.47. In Australia, the ASX All Ordinaries fell 0.25 percent to 5,380.80. In India, the Mumbai Sensex fell 0.85 percent to 20,490.96.

Don’t Miss: Will Ireland Exit Its Bailout Program By the Year’s End?